Tsingtao, Zhujiang Fight Realities Of Chinese Beer Industry With New "High-End" Products

New "Yipin Pure" Beer Follows Last Year's "Augerta" Line Recently, Jing Daily looked at the trend of major Chinese breweries trying to enter the premium beer market in China -- an area dominated by western brands like Carlsberg or Heineken, which account for 70% of sales. For Chinese brands like Tsingtao, which have the infrastructure, capital, distribution networks and international reach to branch into premium segments, it's really a matter of developing a high-quality, premium product (tough) and convincing Chinese drinkers to pay triple or quadruple what they're accustomed to on a bottle of locally produced beer (even tougher). This is a challenge faced by a number of established Chinese brands that have tried to move into the "luxury" market: while your products are of comparable quality, your advertisements feature popular celebrities, and you're competitively priced, for most consumers in China, "foreignness" still equals "attractiveness." Challenges and consumer resistance be damned, last year Tsingtao introduced its first attempt at a premium beer, Augerta (澳古特). Priced at levels considered cheap by western standards (around 10 yuan, or $1.50, a can) but expensive compared to a normal bottle of Tsingtao, Augerta received mixed reviews from the expat community in China yet marked an important step for the Chinese brewing industry. Some of Tsingtao's competitors are also trying their hand at premium brews, with Zhujiang recently introducing its "Supra White Beer" (an adaptation of the Belgian Witbier style), in an attempt to tap the high-end beer niche. This week, Tsingtao launched its newest premium beer, "Yipin Pure" (逸品纯生, literally "superior pure"), in Shanghai. From Guangxi News (translation by Jing Daily team): From its choice ingredients to its bottle design, "Yipin Pure" is all about sophistication and fresh simplicity. The bottle resembles a stalk of green bamboo, with the characters "Yipin" etched in grass-style calligraphy, highlighting a subtle Asian vibe. The ingredients of Yipin Pure consist only of Canadian and Australian golden 2-row barley, top-quality Czech hops, and Tsingtao's proprietary yeast strain. The handcrafted beer is made with the utmost care, reflecting Tsingtao's classic, hundred-year-old brewing culture. The beer pours clear and golden, with an exceptionally smooth flavor befitting the name "Yipin." In recent years, the high-end beer market has developed quickly in China, and now accounts for around 20% of the total beer industry. Aside from Tsingtao, leading brands in the premium segment are largely foreign, which is why the introduction of Yipin Pure is important to help Tsingtao enrich its product line and branch further into this market with a competitive product. Tsingtao isn't simply concerned with offering the best beer possible to consumers, but also feels that only a Chinese brewer truly understands the tastes of Chinese drinkers. So actually, Yipin Pure isn't just another product in the high-end market, it's actually a cultural symbol. It represents the transition from "Made in China" to "Created in China." Additionally, it will promote the intersection of classical Chinese taste and passion for beer and likely kick off a new fashionable trend. As Yan Xu, Tsingtao's president of marketing, told the publication Weekend Consumption (周末消费), Tsingtao doesn't see Yipin Pure as potentially cannibalizing business from its Augerta premium line. Rather, as Yan said, "Augerta is like a luxury product, while Yipin Pure is more like a work of art." Targeting high-end restaurants and hotels -- at least initially -- Yipin Pure is expected to retail for around 20 yuan a bottle (US$3), quite expensive for a domestic Chinese beer. As an article this week in the Yangcheng Evening News points out, the rush we're seeing by breweries like Tsingtao and Zhujiang to introduce premium lines is motivated not only by a sort of patriotic desire to capture market share from foreign rivals, but also by the simple economic realities of the Chinese beer market. China produces and consumes more beer than any other country on earth, with some 40 million tons brewed last year (the U.S., by comparison, produced 24 million tons and Germany 12 million), and since the vast majority of that beer is at the low-end, low-quality spectrum, major Chinese brewers are constantly at a race to the bottom, price-wise. As such, a bottle of domestic beer in China is often less profitable for producers than a bottle of water, with brewers only seeing an average of 100 yuan (US$15) profit from one ton of beer. Excess capacity, increasing competition, and ever-lowering prices have caused China's major brewers -- Tsingtao, Snow, Yanjing and Zhujiang, among others -- to record declining profits in recent years, which has been instrumental in their attempts at beefing up product lines with premium products. Despite the obvious motivations that Chinese brewers have for targeting the premium market, industry insiders told the Yangcheng Evening News that Tsingtao's Yipin Pure and Zhujiang's Supra are probably only going to gain traction in top-tier markets, as they're beyond the price range of most drinkers in second- and third-tier cities. Tweet

Tsingtao, Zhujiang Fight Realities Of Chinese Beer Industry With New "High-End" Products

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Published September 23, 2010

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Tsingtao, Zhujiang Fight Realities Of Chinese Beer Industry With New "High-End" Products